EU clears loan to Sabena successor

BRUSSELS, Belgium -- The European Commission has agreed to let Belgium transfer a bridging credit granted to bankrupt flag carrier Sabena to a new airline.

A spokesman for Prime Minister Guy Verhofstadt, Alain Gerlache, said: "It's confirmed. The Commission has approved the transfer of the bridge loan to DAT (Delta Air Transport)."

Commission spokesman Gilles Gantelet told reporters that Transport Commissioner Loyola de Palacio had approved the switch because Sabena had not spent the 125 million euros.

A Brussels commercial court declared Sabena bankrupt on Wednesday, putting 12,000 jobs in jeopardy, after Belgium failed to find new investors for the debt-laden parent company following the collapse of Swiss co-parent Swissair last month and the global airline crisis sparked by the September 11 hijacked airliner attacks on the United States.

The one-month government credit at market rates could be renewed for up to three months, he said.

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The short-term finance is a key part of the government's plan to convince 12 private investors and three regional investment funds to put 200 million euros into a new company that would take over many of Sabena's European and African routes.

Meanwhile, the Belgian government reached agreement with trade unions on a $350 million compensation fund for half of Sabena's 12,000 workers who are certain to lose their jobs.

A day after Sabena became the first EU flag carrier to go bust, up to 1,000 angry workers staged protests at Brussels airport, blocking access roads and preventing passengers of other airlines from going through passport control.

International flights were suspended from mid-afternoon for several hours, an airport spokesman said.

EU officials had stressed that whatever happened to Sabena would set a precedent as it takes a hard line on state bail-outs.

Belgium said on Wednesday it had raised 200 million euros from banks and investors to jump-start a new airline around Sabena's regional arm Delta Air Transport (DAT). The government said it was optimistic the airline would start flying in days.

Four big banking groups - KBC, Fortis, Dexia and ING Barings' BBL affiliate -- confirmed they were willing to invest in the new airline, but declined to comment on the exact amounts, Reuters news agency reported.

Other non-financial companies confirmed they had been approached but said they had not yet decided whether to join.